Chinese HRS&C prices unlikely to maintain gains

Chinese HRS&C prices unlikely to maintain gains

Even though hot rolled sheet/coil (HRS&C) prices went up as a whole over the past week, the average price of 5.75mm SS400 rose RMB 220/mt ($27), it is unlikely that the prices will be able to hold on to their gains. The price increase over the past week was sharp. Although not many new batches of products arrived in China and some specifications were in short supply, the market condition did not change much. Consequently, changes in the attitudes of market players are becoming a key factor. The China Iron and Steel Association’s meeting about stabilizing the market boosted market players’ confidence and raised market prices. Leading traders are limited in their inventories at present, so they are not actively involved in the price increase. Also, few traders are placing additional orders with steelmakers. It can be noted that medium and small scale traders are not willing to sell their products during the price increase. The selling prices are at various levels, demonstrating the differing attitudes of the traders. End users were not very active in the transactions. Some end users purchased small quantities of products at the beginning of the price increase. For the most part, end users purchased products according to their needs. Their current behavior, therefore, will not influence the price trend in the short term. Meanwhile, it is noteworthy that some major domestic steelmakers, such as Baotou Steel, Handan Steel, Benxi Steel and Lianyuan Steel, announced their November price policies last week. The ex-factory prices of 3.0mm and thicker products range from RMB 3’000/mt ($371) to RMB 3’100/mt ($384). The price will be a target for increases, and a majority of traders are willing to sell their products at this price level. Therefore, business conditions may improve. Moreover, some imported products arrived in China over the course of last week. Sources report that about 7’000 metric tons of thin products imported from Egypt arrived in Shanghai and about 2’000 metric ton products imported from India arrived in Tianjin. At the same time, new batches of domestic products will arrive in China’s major steel markets soon, placing great pressure on the price trend. Many traders point out that prices might go up continuously in the short term. Yet, they worry about the price trend in November, especially in mid November. Therefore, the price increase over the past week will not be a turning point. Prices may demonstrate either a stable tendency or a price decline in the long term, while they will probably go down in the short term. SteelOrbis Shanghai